Hawaii prepares for funds shortfall

December 5, 2012

HONOLULU - Hawaii Gov. Neil Abercrombie said Tuesday that his budget planners are cautiously anticipating that the state may need to immediately make up anywhere from $25 million to $40 million in lost federal funds depending on how Washington acts on the so-called fiscal cliff.

Abercrombie said at a news conference to announce the sale of $867 million in state bonds that his administration is taking the approach that if federal lawmakers can't come through, Hawaii will plan for added costs.

"We're not falling off any cliff," Abercrombie said.

Article Photos

Hawaii Gov. Neil Abercrombie speaks during a news conference in Honolulu on Tuesday with Kalbert Young, state budget and finance director.AP photo

Abercrombie declined to be more specific about which programs could be affected, saying he planned to present his budget later this month. The Legislature reconvenes in January, and Abercrombie will formally present his proposal then. Hawaii's budget for fiscal year 2013 is $11.3 billion.

Abercrombie said the bond sale affirms that investors agree the state is on the right financial track.

Budget and Finance Director Kalbert Young said the deal included refinancing $397 million in bonds for new bonds with lower interest rates. That resulted in $54 million in debt service savings, Young said. Young said the state's interest rate of 2.6 percent was its lowest borrowing cost in history, well below normal municipal bond rates.

Abercrombie's comments came the same day that a bipartisan group of governors met with President Barack Obama and Vice President Joe Biden to seek assurances that any cuts in spending will not shift the financial burden onto states.

Delaware Gov. Jack Markell, a Democrat and chairman of the National Governors Association, said the governors didn't endorse proposals from either Obama or Republicans.

The president's proposal would raise taxes on the wealthiest Americans. Republican proposals would raise revenue by closing tax loopholes and deductions.